Friday, September 24th, 2010

A couple of weeks ago we suggested that one possible use for the landbank being assembled by NAMA and the DEHLG would be to use it for the building of new schools and for other public infrastructure. The Irish Examiner reports today that the Department of Education is in consultation with NAMA to try and procure sites for up to 50 new schools, predominately in the east of the country given changes in the growth (increased birth rate and immigration) and distribution of the population over the past two decades. And the changes have been pronounced in and around Dublin, with between 1996-2006 a growth in households in Fingal of 68.5%, in Meath of 69.3%, in Kildare of 56.1%, in West Meath of 40.8%, in Wicklow of 37.1%, and in South Dublin of 30.5%, though growth in Dun Laoghaire-Rathdown (11%) and Dublin City (10.3%) was relatively modest.

The Department of Education has long known about the school places crisis and has already committed to building 20 new schools this year, along with extending 32 others, to create 23,500 places (14,500 at the primary level, 9,000 post-primary) at a cost of €579m. It has also appointed design teams to another 51 projects. Clearly this programme needs to be stepped up if it is to cater for existing and upcoming demand. The capital programme will also provide a stimulus to the economy through construction activity. The Dept of Education should also engage in talks with the Dept of Environment given that they are now in possession of 2000+ hectares of land at 600 plus sites transferred to it by local authorities who’d originally purchased the land for social/affordable housing (see here).

50 sites three or four years ago, when land in Ireland was the most expensive in Europe (see here for comparison graph), would have cost the taxpayer an absolute fortune. We now have the opportunity to purchase them at a fraction of that cost given the 75-90% drop in development land prices. As per our last post, all government departments who are planning capital projects over the next few years should be talking to NAMA/DEHLG with regards to procuring suitable land at a reasonable price to ensure maximum value to the taxpayer. It would be a folly for NAMA to offload land to the private sector, which the state then has to purchase back from in the future for a premium, especially when it knows that it will in all likelihood need it. This is the whole rationale of state landbanking – to ensure long term planning can unfold in a coordinated way for the public good at a reasonable cost without being a hostage to the free market.